Profitability of small-scale farming in Slovenia and likely prospects for the future

Abstract

This paper is concerned with the estimation of financial effects of farming in Slovenia. First it describes the evolution of farm management accounting and limitations of some techniques which are still often subject of discussion in Slovenia. It lists main records necessary for compiling gross margin accounts as the most promising method for farm business analysis and planning. The practical part of this report is concerned with limited survey to estimate profitability of farming on a sample of 15 Slovenian farms. The procedure of data collection is described and questions about reliability of results given existing circumstances (absence of book-keeping) are emphasised. An appropriate spreadsheet for profit calculation has been designed and additional subroutines created as tools for discovering weaknesses and strengths of existing practice. Calculations show positive financial results for year 1994. Values range between 113,000 and 1.772,000 SIT (nominal values). Given the labour consumed for farming, results indicate poor returns to inputs and call for better management with the resources available. Crude diagnosis claims for a reduction in fixed costs per unit of output and an increase in the intensity of production. Possible changes in the medium to long term are indicated, taking into account constraints from the wider business environment.